Since the late 1980s recombinant human erythropoietin (r-EPO) has been studied as an alternative to packed red blood cell (RBC) transfusion for the treatment of anemia of prematurity in very low birth weight infants. Initial trials and reports focused on r-EPO's ability to prevent or treat anemia of prematurity with the goal of eliminating RBC transfusion but achieved limited success. New concerns about the safety of r-EPO administration have emerged. Past cost-benefit analyses of r-EPO administration versus transfusion for the treatment of anemia of prematurity have been nearly balanced. Autologous transfusion, blood-sparing technologies, changes in RBC transfusion technique and safety, and further elucidation of the risk-benefit ratio of r-EPO therapy may change the cost-benefit analysis.